376 U.S. 543 (1964), 91, John Wiley & Sons, Inc. v. Livingston

Docket Nº:No. 91
Citation:376 U.S. 543, 84 S.Ct. 909, 11 L.Ed.2d 898
Party Name:John Wiley & Sons, Inc. v. Livingston
Case Date:March 30, 1964
Court:United States Supreme Court

Page 543

376 U.S. 543 (1964)

84 S.Ct. 909, 11 L.Ed.2d 898

John Wiley & Sons, Inc.



No. 91

United States Supreme Court

March 30, 1964

Argued January 9, 13, 1964




Respondent labor union brought an action under § 301 of the Labor Management Relations Act to compel arbitration under a collective bargaining agreement executed by a company which the petitioner acquired by merger. The District Court denied relief, but the Court of Appeals reversed and directed arbitration.


1. The courts determine whether arbitration is required, based on the agreement. Atkinson v. Sinclair Refining Co., 370 U.S. 238, followed. Pp. 546-547.

2. The substantive law which controls suits under § 301 of the Act is federal law. Textile Workers Union v. Lincoln Mills, 353 U.S. 448, followed. P. 548.

3. Rights of employees under a collective bargaining agreement are not automatically lost by the disappearance by merger of the employer, and, in appropriate circumstances, the successor employer may be required to arbitrate under the contract. P. 548.

4. Arbitration has a key role in effectuating national labor policy, and when there is substantial continuity of identity in the business enterprise and a clear assertion by the union of rights under the agreement, the duty to arbitrate survives the merger. Pp. 549-551.

5. Procedural questions growing out of a dispute and bearing on its disposition are to be determined by the arbitrator. Pp. 555-559.

313 F.2d 52, affirmed, in part on other grounds.

Page 544

HARLAN, J., lead opinion

MR. JUSTICE HARLAN delivered the opinion of the Court.

This is an action by a union, pursuant to § 301 of the Labor Management Relations Act, 61 Stat. 136, 156, 29 U.S.C. § 185, to compel arbitration under a collective bargaining agreement. The major questions presented are (1) whether a corporate employer must arbitrate with a union under a bargaining agreement between the union and another corporation which has merged with the employer, and, if so, (2) whether the courts or the arbitrator is the appropriate body to decide whether procedural prerequisites which, under the bargaining agreement, condition the duty to arbitrate have been met. Because of the importance of both questions to the realization of national labor policy, we granted certiorari (373 U.S. 908) to review a judgment of the Court of Appeals directing arbitration [84 S.Ct. 912] (313 F.2d 52), in reversal of the District Court which had refused such relief (203 F.Supp. 171). We affirm the judgment below, but, with respect to the first question above, on grounds which may differ from those of the Court of Appeals, whose answer to that question is unclear.


District 65, Retail, Wholesale and Department Store Union, AFL-CIO, entered into a collective bargaining agreement with Interscience Publishers, Inc., a publishing firm, for a term expiring on January 31, 1962. The agreement did not contain an express provision making it binding on successors of Interscience. On October 2,

Page 545

1961, Interscience merged with the petitioner, John Wiley & Sons, Inc., another publishing firm, and ceased to do business as a separate entity. There is no suggestion that the merger was not for genuine business reasons.

At the time of the merger, Interscience had about 80 employees, of whom 40 were represented by this Union. It had a single plant in New York City, and did an annual business of somewhat over $1,000,000. Wiley was a much larger concern, having separate office and warehouse facilities and about 300 employees, and doing an annual business of more than $9,000,000. None of Wiley's employees was represented by a union.

In discussions before and after the merger, the Union and Interscience (later Wiley) were unable to agree on the effect of the merger on the collective bargaining agreement and on the rights under it of those covered employees hired by Wiley. The Union's position was that, despite the merger, it continued to represent the covered Interscience employees taken over by Wiley, and that Wiley was obligated to recognize certain rights of such employees which had "vested" under the Interscience bargaining agreement. Such rights, more fully described below, concerned matters typically covered by collective bargaining agreements, such as seniority status, severance pay, etc. The Union contended also that Wiley was required to make certain pension fund payments called for under the Interscience bargaining agreement.

Wiley, though recognizing for purposes of its own pension plan the Interscience service of the former Interscience employees, asserted that the merger terminated the bargaining agreement for all purposes. It refused to recognize the Union as bargaining agent or to accede to the Union's claims on behalf of Interscience employees. All such employees, except a few who ended their Wiley employment with severance pay and for

Page 546

whom no rights are asserted here, continued in Wiley's employ.

No satisfactory solution having been reached, the Union, one week before the expiration date of the Interscience bargaining agreement, commenced this action to compel arbitration.


The threshold question in this controversy is who shall decide whether the arbitration provisions of the collective bargaining agreement survived the Wiley-Interscience merger, so as to be operative against Wiley. Both parties urge that this question is for the courts. Past cases leave no doubt that this is correct.1

Under our decisions,

Page 547

[84 S.Ct. 913] whether or not he company was bound to arbitrate, as well as what issues it must arbitrate, is a matter to be determined by the Court on the basis of the contract entered into by the parties.

Atkinson v. Sinclair Refining Co., 370 U.S. 238, 241. Accord, e.g., United Steelworkers of America v. Warrior & Gulf Navigation Co., 363 U.S. 574, 582. The problem in those cases was whether an employer, concededly party to and bound by a contract which contained an arbitration provision, had agreed to arbitrate disputes of a particular kind. Here, the question is whether Wiley, which did not itself sign the collective bargaining agreement on which the Union's claim to arbitration depends, is bound at all by the agreement's arbitration provision. The reason requiring the courts to determine the issue is the same in both situations. The duty to arbitrate being of contractual origin, a compulsory submission to arbitration cannot precede judicial determination that the collective bargaining agreement does in fact create such a duty. Thus, just as an employer has no obligation to arbitrate issues which it has not agreed to arbitrate, so, a fortiori, it cannot be compelled to arbitrate if an arbitration clause does not bind it at all.

The unanimity of views about who should decide the question of arbitrability does not, however, presage the parties' accord about what is the correct decision. Wiley, objecting to arbitration, argues that it never was a party to the collective bargaining agreement, and that, in any event, the Union lost its status as representative of the former Interscience employees when they were mingled in a larger Wiley unit of employees. The Union argues that Wiley, as successor to Interscience, is bound by the latter's agreement at least sufficiently to require it to arbitrate. The Union relies on § 90 of the N.Y. Stock Corporation Law, which provides, among other things, that no "claim or demand for any cause" against a constituent

Page 548

corporation shall be extinguished by a consolidation.2 Alternatively, the Union argues that, apart from § 90, [84 S.Ct. 914] federal law requires that arbitration go forward, lest the policy favoring arbitration frequently be undermined by changes in corporate organization.

Federal law, fashioned "from the policy of our national labor laws," controls. Textile Workers Union of America v. Lincoln Mills, 353 U.S. 448. State law may be utilized so far as it is of aid in the development of correct principles or their application in a particular case, id. at 457, but the law which ultimately results is federal. We hold that the disappearance by merger of a corporate employer which has entered into a collective bargaining agreement with a union does not automatically terminate all rights of the employees covered by the agreement, and that, in appropriate circumstances, present here, the successor employer may be required to arbitrate with the union under the agreement.

Page 549

This Court has, in the past, recognized the central role of arbitration in effectuating national labor policy. Thus, in Warrior & Gulf Navigation Co., supra, at 578, arbitration was described as "the substitute for industrial strife," and as "part and parcel of the collective bargaining process itself." It would derogate from "[t]he federal policy of settling labor disputes by arbitration," United Steelworkers of America v. Enterprise Wheel & Car Corp., 363 U.S. 593, 596, if a change in the corporate structure or ownership of a business enterprise had the automatic consequence of removing a duty to arbitrate previously established; this is so as much in cases like the present, where the contracting employer disappears into another by merger, as in those in which one owner replaces another, but the business entity remains the same.

Employees, and the union which represents them, ordinarily do not take part in negotiations leading to a change in corporate ownership. The negotiations will ordinarily not concern the wellbeing of the employees, whose advantage or disadvantage, potentially great, will inevitably be incidental to the main...

To continue reading